Net Neutrality, USF, Data Security Discussed at Senate Hearing

Net neutrality, universal service, and data security were among the topics discussed this morning at a hearing featuring FCC Chairman Ajit Pai and Federal Trade Commission (FTC) Chairman Joseph Simons before the Senate Appropriations Committee’s financial services and general government subcommittee.

While the hearing was called to review the fiscal year 2019 budget requests of the independent agencies, most of the questions from lawmakers dealt with policy issues, including yesterday’s 52–47 vote in the Senate in favor of a Congressional Review Act resolution disapproving of the FCC’s December 2017 restoring Internet freedom (RIF) action (TR Daily, May 16) and whether the FTC is prepared to handle net neutrality enforcement.

Sen. James Lankford (R., Okla.), the subcommittee’s chairman, asked Mr. Simons if the FCC has what it needs to protect consumers from any inappropriate practices by ISPs.

“I believe we do have the resources and the capability, but we are conducting an inventory at the present just to make sure and confirm that that is the case,” Mr. Simons replied. He added that Mr. Pai said the FCC could provide resources to the FTC, particularly technical resources, if it needs it.

But Mr. Simons said that “we want to take a close look at whether we need additional authority in the privacy and data security area, particularly as regards to our ability to get remedial relief” in cases against both edge providers and ISPs. Asked to elaborate, Mr. Simons said that civil penalty authority for such cases would be helpful.

Mr. Simons, who was sworn in earlier this month (TR Daily, May 1) and is one of four new commissioners who have joined the FTC, with a fifth awaiting the departure of Commissioner Maureen K. Ohlhausen, said at today’s hearing, the first in his new role, that he is thinking of near- and long-term policy and enforcement issues for the FTC’s agenda.

“The FTC is well aware of concerns about the size and reach of large technology companies and their growing importance in consumers’ daily lives,” he said. “The commission will continue to scrutinize tech mergers and conduct by tech firms to ensure not only that consumers benefit from their innovative products but also that competition thrives in this dynamic and highly influential sector.”

He announced that the agency plans to hold a series of public hearings on key issues beginning later this year. One of the first will be on “competition and consumer protection implications” in the wake of the FCC’s RIF order adopted last year (TR Daily, Dec. 14, 2017), he said.

Sen. Chris Coons (D., Del.), the subcommittee’s ranking member, said that in the wake of the Facebook, Inc.-Cambridge Analytica case, “I’m increasingly concerned that the average consumer doesn’t really understand the scope and the potential reach of personally identifiable information … for them to be able to give meaningful consent.”

He asked Mr. Simons whether he agreed that paid prioritization, blocking, and throttling to disadvantage people from accessing the Internet could be seen as an unfair practice.

“Under the right circumstances, yes,” Mr. Simons replied. He also stressed that consumer privacy is important to the FTC. “We’re active in this area,” he said. “This is a priority for us.”

Sen. Coons also asked the witnesses if they agreed that Americans should have reasonable access to high-quality Internet services and that the government has a role in guarding against “fast or slow lanes.”

“I’m pleased with the vote that we had yesterday, and I know that you might not be as pleased as I am. With that, I still think there’s a pathway forward,” Sen. Joe Manchin (D., W.Va.) said. “We want to work this out, OK, but we’re not going to allow it to be owned by anybody that’s not the average citizen, that can’t get on and have the same opportunities that everyone should have.”

Sen. Patrick Leahy (D., Vt.), ranking member of the full committee, harshly criticized Mr. Pai on several issues, including the RIF order.

“I disagree with many of the decisions you made at the FCC,” he said. “I also am concerned about the tone you have adopted. I think you’ve showed contempt for the public in your decisions.” He cited the “overwhelming support” for the net neutrality rules that the RIF order rescinded.

He also complained that Mr. Pai has sought to undermine media ownership regulations and engaged “in blatant partisan activity.”

Sen. Leahy asked Mr. Pai if he can provide statistics on how the RIF order would lead to more investment and lower broadband prices for Vermont residents at the one-year anniversary of the RIF order. Mr. Pai said he couldn’t, but that the FCC’s action would do both on a national basis.

Universal service was raised by multiple senators, including the FCC’s Mobility Fund, Lifeline program, and high-cost support.

Sen. Manchin expressed concern about MF-II and the process for challenging the eligibility of an area for support.

Mr. Pai said state and local governments are eligible to submit challenges, and he said the FCC has upgraded the quality of coverage maps. But Mr. Manchin, who is seeking a waiver to participate in the challenge process (TR Daily, May 16), said he is concerned that state and local officials won’t figure out how the challenge process works until it is too late. Mr. Pai said the FCC is reaching out to them to educate them.

Sen. Manchin also said he is concerned about high-cost areas, such as those in his state, getting broadband services. Mr. Pai said USF subsidies can help, but so too can alternative technologies such as fixed wireless or satellite solutions.

Mr. Leahy said that the MF-II coverage map undercounts households unserved by 20,000, while Mr. Lankford also said he noticed the map says areas of Oklahoma have mobile broadband service when they don’t even have mobile voice service.

Sen. Van Hollen asked Mr. Pai if he supports raising the cap for rural health care support. Mr. Pai said he does, although he said he can’t say “what the number should be.”

Sen. Lankford also asked about efforts to reform the Lifeline program. Mr. Pai said that the FCC is moving ahead to target funding to rural areas while enhancing the role of facilities-based providers. He also said a national verifier should be running in six states by the end of this year and more states next year.

Mr. Pai said earlier in the hearing that the FCC has adopted an item to help Puerto Rico and the U.S. Virgin Islands rebuild in the wake of last year’s hurricanes.

Regarding robocalls, Mr. Simons said that a “technological solution” is needed to address the problem, adding that some technologies on the market are “working fairly well,” while Mr. Pai noted that the FCC has approved a call authentication standard and taken other actions, including pursuing enforcement.

Senators also expressed concern about the U.S. falling behind in the deployment of 5G services.

Sen. Steve Daines (R., Mont.) said China is able to make more spectrum available to its carriers than the U.S. can. Mr. Pai replied that the FCC has already scheduled auctions of 28 gigahertz and 24 GHz spectrum, plans to consider an item at its June 7 meeting to free up additional frequencies (see separate story), and has worked to streamline the infrastructure deployment process.

Sen. Daines said the FCC should prioritize deployment to rural areas and asked the Chairman if he agrees that universal service and Rural Utilities Service funds should go to underserved areas rather than overbuilding in areas that already have service. Mr. Pai said he does.

Sen. Lankford also said he was concerned about 5G deployment in the U.S. One concern involves “economic espionage” while the other involves “health concerns” over radiation raised by people.

Mr. Pai said the FCC is not the expert health agency and that it relies on the Food and Drug Administration and others to set standards, adding that “we are confident that our standards are ones that are healthy for consumers going forward.”

As to espionage, he noted that the FCC has launched a proceeding to consider barring the use of universal service for purchases from companies deemed to pose a national security threat to the U.S. communications infrastructure (TR Daily, April 17).

Sen. Lankford also asked for an update on efforts to tackle contraband cellphones in correctional facilities. Mr. Pai noted that he convened a meeting of stakeholders in February (TR Daily, Feb. 7), and that a task force of industry and corrections representatives held its first meeting last month (TR Daily, April 30). He said the participants agreed on protocols for testing of micro-jamming. He also noted that the FCC has been in contact with the Department of Justice, which authorizes jamming by authorized parties, and said that additional authority from Congress “could be useful in allowing us to tackle this problem in a rifle-shot way, so to speak.”

Sen. Lankford said he will have his staff set up a meeting with Mr. Pai’s staff to discuss possible legislative solutions. “This is not a partisan issue for us, but it’s an issue that needs to be resolved long term and quickly,” he added.

Sen. Coons asked Mr. Pai questions about the national media ownership cap, the UHF discount, and the pending Sinclair Broadcast Group-Tribune Media Co. merger, including what he thought the cap should be and whether the FCC will wait for the U.S. Court of Appeals for the District of Columbia Circuit to act on a UHF discount case before moving on the cap.

Mr. Pai said the national cap is the subject of an open proceeding and the FCC has not completed it yet, and he noted that the clock on the merger has been stopped since January and he doesn’t know when it might be restarted. He did not answer whether the Commission would wait for the court to rule.

The FCC is asking for $333.1 million for FY 2019, compared to $322.0 million for FY 2018. All of that would be generated by regulatory fees. The FTC wants $309.7 million for FY 2019; it got $306.3 million for FY 2018, some of which would come from fees. —Paul Kirby, [email protected]

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